Bond markets dial back rate rise bets after inflation cools

The market’s expectations of another interest rate rise from the Reserve Bank of Australia this year are starting to fade after a surprisingly cool inflation report reduced the pressure on the central bank to keep tightening monetary policy.

Bond traders trimmed their rate rise bets after the monthly consumer price index for April cooled at a faster clip than anticipated to 4.2 per cent. Core inflation still ticked up to 3.4 per cent, which is the highest since late 2024 and well outside the RBA’s target.

Source: https://www.afr.com/markets/debt-markets/bond-markets-dial-back-rate-rise-bets-after-inflation-cools-20260525-p600j5